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Basis Of Estimate

You need to justify your price

Basis of Estimate development starts with understanding the Statement/Scope of Work (SOW) requirements within the Request for Proposal/Quote (RFP/RFQ).  A detailed Work Breakdown Structure (WBS) is developed to determine the most efficient means of performing the work.  This structure is then compared against historical data from the RFP/RFQ to determine the amount of work to be performed (in hours) and the personnel to perform this work by labor category.  These basis of estimates can be done on a very detailed basis or at a higher level, depending on the available data.  The more detailed the estimate, the greater the confidence level in the resulting hours estimate. 

Think of a house being built.  An estimate based on the detailed floor plans will have a much lower margin of error in the final estimate than a parametric estimate based on the rough criteria of two story, 2,000 square feet brick home, which will derive a price that has a +/- of 30% accuracy.   The same with a Basis of Estimate.  The more detailed the data available, the more accurate the overall price for the SOW.

As an example, on one estimate DCG Pricing was within 0.5% of the Independent Government Cost Estimate (IGCE).  This was on a ~$130 million proposal after doing a detailed Basis of Estimate.

Telephone: (703) 330-2283

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DCG Pricing Consultants are your pricing experts helping you get your proposal pricing right with services from DCAA compliant accounting,  cost analysis, price to win, or competitor analysis and much more.  DCG Pricing gives you the support you need when you need it to make your proposal efforts a success.

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